When investors pegged Twitter's value at $1 billion
in September, the public scratched its collective head. How
could a site with no revenue stream and no desire to host advertising
be worth $1 billion? Today, we get a hint of an answer. As BusinessWeek
, Twitter earned $25 million from Internet-search deals
with Google and Microsoft, yielding a small profit for 2009. Twitter also reduced its 2009
expenses by renegotiating more favorable contracts with telecom
companies who distribute billions of text messages to and from Twitter.
Reacting to the news, tech bloggers are hailing Twitter's meteoric rise (as they are fond of doing) and adjusting their predictions for its future as a viable business. At the
same time, some question whether BusinessWeek's report can be trusted:
- Twitter Has Tamed the Google Beast, writes Kit Eaton at Fast Company: "Even the mighty Google monster is slightly humble before the success of
the lifecasting/microblogging/Facebook-challenging Twitter. Google has
long made it clear that it wanted to get search working right up to the
second, and it obviously couldn't get its own microblogging system
working as well as Twitter, nor could it buy the company. The one
remaining option was to pay Twitter for access."
- Made Profit Without Even Trying, writes Spencer Ante at Bloomberg: "Until earlier this year, Twitter wasn't even focused on
revenue -- let alone profit. The company attracted millions of
users with a free service that posts 140-character messages,
known as tweets. Chief Executive Officer Evan Williams said two
months ago that the company was spending almost all its time
improving the product, rather than seeking ways to make money."
- Still Not a Sustainable Business Model, writes Jay Yarow
at The Business Insider: "While the small profit is welcome news for
Twitter, it appears to be almost incidental. It's certainly not the
reason investors valued the company at $1 billion earlier this year.
Twitter could hire a few more employees and wipe out the profit.
Indeed, it says its looking at hiring talent through acquisition."
- Twitter Is Profitable?! Not So Fast, writes Frank Reed at Marketing Pilgrim: "I now immediately place this story in the
category of rumor. I suspect that if Twitter wants people to know that
it turned a profit, no matter how big or small, they will let us know.
Do I think they actually did turn a profit? I honestly don't know
because I don't do their accounting and I haven't spoken to 'sources'
who think that leaking corporate data is cool... What this looks like though is that
BusinessWeek is starting to sound more like the tech blogs and new
world media that it has fought against. Verify facts with the company
being covered? Nope. Two anonymous insiders will do because the story
- What's Next for Twitter Om Malik
at GigaOm expects Twitter to expand in three big ways: "*New management
team including several new 'C'-suite executives. *Infrastructure to
scale their network to accommodate future growth. *Hiring more
engineers and other key people as it tries to build out the service."
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